Crude jumps past $114 after dollar weakens against euro, heating oil rallies
Posted on Wednesday, August 20, 2008
NEW YORK — Oil prices rebounded Tuesday, jumping back above $ 114 barrel after the dollar weakened against the euro and a rally in heating oil pulled new buyers into energy markets.
Light, sweet crude for September delivery rose $ 1. 66 to settle at $ 114. 53 on the New York Mercantile Exchange after alternating between positive and negative territory earlier in the day. The September contract expires today, adding to the volatility.
At the pump, retail gas prices continued their decline, suggesting that cash-strapped Americans are still cutting back on their driving. A gallon of regular slipped another penny overnight to a new national average of $ 3. 73, almost 10 percent lower than record prices of $ 4. 114 a gallon reached July 17, according to auto club AAA, the Oil Price Information Service and Wright Express.
Crude began the day lower after Tropical Storm Fay missed oil and gas installations in the Gulf of Mexico, easing concerns about a disruption in supplies. But prices later spiked more than $ 3 a barrel, apparently driven higher by a surge in heating oil futures that triggered technical buy orders in energy markets, analysts said.
Heating oil futures rose 3. 89 cents to settle at $ 3. 1237 a gallon on the Nymex after earlier rising more than 3 percent to $ 3. 1998.
“Crude’s just getting pulled up by heating oil. It was a quick pop, and technical triggers may have been hit,” said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.
Also supporting prices Tuesday was a slightly weaker dollar compared with the euro. The 15-nation euro traded at $ 1. 4783, up from $ 1. 4697, late Monday in New York. A falling greenback encourages buying among investors seeking commodities like oil as a hedge against inflation or weakness in the U. S. currency.
Crude’s rally came despite the easing threat from Tropical Storm Fay. The sixth named storm of the 2008 Atlantic hurricane season swept over southwest Florida early Tuesday, causing heavy rain and wind but staying well clear of oil and gas platforms scattered across the Gulf. The storm was moving to the north and was expected to gradually weaken during the day. Fay steamed through the Caribbean over the weekend and was blamed for at least 14 deaths in Haiti and the Dominican Republic.
Royal Dutch Shell PLC said the storm no longer threatened its oil facilities in the Gulf and the company had begun redeploying 425 evacuated workers.
“We dodged a bullet with the storm,” said Phil Flynn, analyst at Alaron Trading Corp. in Chicago.
Some recovery in oil was expected after steep price drops over the past month. Oil prices have shed about $ 35, or 24 percent, from their all-time trading record of $ 147. 27 a barrel reached July 11 amid mounting evidence that a cooling global economy and high fuel costs are curtailing demand for energy.
Olivier Jakob of Petromatrix in Switzerland, however, said it was too early to assert that oil prices had reached a bottom, “especially since there is a clear lack of buying momentum.” Regarding oil fundamentals, Jakob said it was worth keeping an eye on how China’s import of oil products will develop after the buildup of stocks for the Beijing Olympics. Reports of lower demand there could put further downward pressure on prices.
In other Nymex trading, gasoline prices rose 4. 87 cents to settle at $ 2. 639 a gallon, while natural gas futures added 8. 8 cents to settle at $ 7. 976 per 1, 000 cubic feet. In London, October Brent crude rose $ 1. 31 to settle at $ 113. 25 a barrel. Information in this article was contributed by Pablo Gorondi and Eileen Ng of The Associated Press.
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